Visa owes YOU money if you used them to process from 1993-2003

[Jace]

check this shit out, sorry if it has been posted already

Adult businesses that processed transactions through Visa and MasterCard prior to June 21, 2003 may be owed part of a record $3.05 billion settlement that resulted from three mainstream lawsuits against the credit card giants.

According to Spectrum Settlement Recovery, a company that represents class members in class-action matters, more than 5 million merchants who accepted Visa or MasterCard during the period between Oct. 25, 1992 and June 21, 2003 “are eligible to collect a significant refund [of processing fees they paid to Visa and MasterCard] as part of this settlement. Fund allocation will be based on [the] volume of debit and credit card transactions between such dates.”

According to court documents, the series of lawsuits began in 1996.Wal-Mart and The Limited filed a suit alleging that Visa and MasterCard overcharged for processing and violated the Sherman Antitrust Act by requiring merchants who accepted their credit cards also to accept debit cards, which carried a higher processing fee. In 2000, the suit was granted class-action status. Several appeals (reaching as high as the U.S. Supreme Court) later, the case was ordered to trial. A settlement agreement was executed on June 4, 2003.

In the interim, the U.S. Department of Justice filed an antitrust suit against the card companies (in 1998), as did groups of merchants who had opted out of the original class action in South Carolina, California, and New York (in 2003). The three actions were consolidated in 2003, and the settlement agreement was upheld by the U.S. Court of Appeals for the 2nd Circuit in January 2005.

Reviews of claims submitted by merchants and disbursements from the fund are expected to begin in 2006.

“Per the plan of allocation, the settlement provides rates of compensation for three transaction types: off-line debit charges, credit card charges, and online debit card charges for PIN-secured transactions,” according to a Spectrum representative.

“The credit card industry has taken advantage of adult-entertainment companies for decades,” notes Spectrum’s Pete Bennett. “If your business accepted Visa or MasterCard between 1992 and 2003, the credit card companies probably owe you real money.”

Adult merchants discovered their standing as class members almost serendipitously when adult director and cameraman Miles Long received a call from an old friend who mentioned the settlement. Long’s friend is employed by Spectrum.

“I was floored,” Long tells AVNOnline.com. “It turns out that in addition to making it difficult for us in the adult industry to do business, Visa and MasterCard have overcharged everybody on every transaction.”

The card companies impose additional start-up and annual fees and higher transaction charges on adult businesses in both the brick-and-mortar and online spheres because they consider adult entertainment a “high-risk” category.

“We’ve been collectively lumped together and stigmatized,” Long says. “It’s time for us to stand together as an industry and say ‘Give us our money!’ To know that they would go so far as to overcharge us intentionally and then get caught with their hand in the cookies jar ... As an industry, I would really like to see us get what’s coming to us.”

No deadline for filing a claim as a class member has been set, though one is expected to be declared by October.

Business owners interested in receiving more information about the class action and their options may contact Bennett at pbennett@spectrumsettlement.com.

[slavdogg]

Can we recover for transactions done though DMR ??

[Dravyk]

This means webmaster affiliates got cheated as well.

If the sponsors get their money, I doubt affiliates will ever see any of it.

[Jace]

Originally Posted by Dravyk

This means webmaster affiliates got cheated as well.

If the sponsors get their money, I doubt affiliates will ever see any of it.

very good point, but wouldn't that also be means of a nice lawuit if sponsors don't offer that money?

[Winetalk.com]

Originally Posted by JaceXXX

very good point, but wouldn't that also be means of a nice lawuit if sponsors don't offer that money?

The point is ridiculous,
affiliates don';t have contracts with Visa, merchants do.

[Rolo]

And for a long time 3rd party processors were the ones dealing with VISA - not the sponsors... so if billing companies get money from visa, then it will not be forwarded to sponsors.

[TheEnforcer]

Nobody should be surprised by this. Visa and MC are bussiness giants and giants often push their weight around because they don't have much of anything to keep them in check.

[Hell Puppy]

Yup, this might be a littl windfall for the processors, but unless you have your own merchant account, I doubt the site owners see any of it.

The typical PSP contract calls for a percentage fee that is based on volume plus holdbacks and any penalties. They are no more obligated to pass along savings to you they might incur from a better deal from their banks or MC/Visa than any other business would be if they cut a more favorable deal with their vendors.

If you expect otherwise, ask yourself this, were you planning on passing whatever you might have been refunded back along to your customers, the surfers?

[Dravyk]

Originally Posted by Hell Puppy

Yup, this might be a littl windfall for the processors, but unless you have your own merchant account, I doubt the site owners see any of it.

The typical PSP contract calls for a percentage fee that is based on volume plus holdbacks and any penalties. They are no more obligated to pass along savings to you they might incur from a better deal from their banks or MC/Visa than any other business would be if they cut a more favorable deal with their vendors.

If you expect otherwise, ask yourself this, were you planning on passing whatever you might have been refunded back along to your customers, the surfers?

Aha! Caught you in a flaw, HP.

Surfers aren't entitled to monies back because they didn't get short-shrifted in the first place; they paid the correct amount and had the correct amount taken out. It is the sponsors -- and revshare webmasters -- who did not get an accurate tally from VISA/MC.

As for the processors, we will have to see how this is going to be handled. It's quite possible sponsors who used IPSPs will send VISA/MC their gross sales amounts and the court will direct them to pay the merchants back directly. If it does go to the processors, I have a feeling they will pay. Afterall it's pretty much only two companies this industry has to deal with now adays.

[Raven]

Interesting. So the third party billers might get money. The sponsors and revshare webmasters and site owners who used third party billers won't see a dime.

Anyone want to call Spectrum Settlement Recovery and see if they'd like to take on IBill?

[Hell Puppy]

Originally Posted by Dravyk

Aha! Caught you in a flaw, HP.

Surfers aren't entitled to monies back because they didn't get short-shrifted in the first place; they paid the correct amount and had the correct amount taken out. It is the sponsors -- and revshare webmasters -- who did not get an accurate tally from VISA/MC.

As for the processors, we will have to see how this is going to be handled. It's quite possible sponsors who used IPSPs will send VISA/MC their gross sales amounts and the court will direct them to pay the merchants back directly. If it does go to the processors, I have a feeling they will pay. Afterall it's pretty much only two companies this industry has to deal with now adays.

I'd have to fish out my contracts to be absolutely certain, but I dont think the "transaction charge" applied by the iPSPs says anything about the MC/Visa charges and instead just says "13.5%", "14.5%", or whatever deal you managed to negotiate based on your volume. It isn't stated as some caclulation of the "MC/Visa charges plus an additional X%".

In which case, if that's what they took out, then your check was calculated properly.

[Dravyk]

Originally Posted by Hell Puppy

I'd have to fish out my contracts to be absolutely certain, but I dont think the "transaction charge" applied by the iPSPs says anything about the MC/Visa charges and instead just says "13.5%", "14.5%", or whatever deal you managed to negotiate based on your volume. It isn't stated as some caclulation of the "MC/Visa charges plus an additional X%".

In which case, if that's what they took out, then your check was calculated properly.

I see what you are saying. Yes, hmm, it would depend on how it was done. One way would be sponsors and affiliates; the other way it would only apply to processors and those with their own merchant accounts.

Good thinking there. Now I'm wondering which way it is.

[RyanLanane]

Originally Posted by Hell Puppy

I'd have to fish out my contracts to be absolutely certain, but I dont think the "transaction charge" applied by the iPSPs says anything about the MC/Visa charges and instead just says "13.5%", "14.5%", or whatever deal you managed to negotiate based on your volume. It isn't stated as some caclulation of the "MC/Visa charges plus an additional X%".

In which case, if that's what they took out, then your check was calculated properly.

Unfortunately I agree here;

Not that it wouldn't be nice to get even 1/2 of 1% of say what.. 4 or 5 million dollars processed through Paycom - I could definately handle a kickback like that, especially right now

[RyanLanane]

Damn I just realized after I made that post... and did some quick math... Paycome revenues from me alone, which I realized 5-6 million is actually on the low side - Wow, if they have a 30% profit margin those SOB's are making more than bank

Not to mention the reserve money they are sitting on top of 'collecting interest' which for some reason we don't get, never did get that. Fine keep our money in reserves BUT pay us the damn interest if you are really keeping them for the reasons you state...

[Dravyk]

Originally Posted by RyanLanane

Not to mention the reserve money they are sitting on top of 'collecting interest' which for some reason we don't get, never did get that. Fine keep our money in reserves BUT pay us the damn interest if you are really keeping them for the reasons you state...

That's the cost of doing business, Ryan.

I remember when younger webmasters getting $35 flat from sponsors would compain about the email boxes and exit consoles on paysites. Affiliate owners had to explain to them that was how they were able to pay them $35 flat, and if they wanted it other wise, no problem, they would then go down to $25 flat. Soon after the model for no exits for TGP traffic came into being.

[Hell Puppy]

Originally Posted by Dravyk

That's the cost of doing business, Ryan.

I remember when younger webmasters getting $35 flat from sponsors would compain about the email boxes and exit consoles on paysites. Affiliate owners had to explain to them that was how they were able to pay them $35 flat, and if they wanted it other wise, no problem, they would then go down to $25 flat. Soon after the model for no exits for TGP traffic came into being.

I dont know if they're still doing it this way or not, but most of the old contracts were written with 5% as a holdback that was to be returned 6 months later. This was their insurance against a site just suddenly shutting the doors and leaving them holding the bag on a bunch of chargebacks or whatever.

Some of the processors got creative with this a few years back taking large chunks of money owed as past holdbacks and turning it into a reserve and ceasing to holdback the 5%.

That's all well and good as long as your volume is consistent or perhaps increasing. But if you're someone like Ryan who during that time went from doing 7 figures down to being all but out of the paysite business, then they are probably sitting on a reserve that is total overkill for current volume levels.

I'd be curious to know if anyone has ever received any of their reserve back when they've ceased processing completely or even received a part of their reserve back to bring it more in line with current volumes.

[RyanLanane]

Originally Posted by Hell Puppy

I dont know if they're still doing it this way or not, but most of the old contracts were written with 5% as a holdback that was to be returned 6 months later. This was their insurance against a site just suddenly shutting the doors and leaving them holding the bag on a bunch of chargebacks or whatever.

Some of the processors got creative with this a few years back taking large chunks of money owed as past holdbacks and turning it into a reserve and ceasing to holdback the 5%.

That's all well and good as long as your volume is consistent or perhaps increasing. But if you're someone like Ryan who during that time went from doing 7 figures down to being all but out of the paysite business, then they are probably sitting on a reserve that is total overkill for current volume levels.

I'd be curious to know if anyone has ever received any of their reserve back when they've ceased processing completely or even received a part of their reserve back to bring it more in line with current volumes.

Epoch has been kind in releasing reserves to me over the years - I say this even after they just denied a reserve release this last week to me as I am down to them holding about 30X my weekly processing volume. I would of liked that to be at 3 months worth, which is pretty much what it has been at over the last few years as my volume decreased.

I was told others in my situation aren't as lucky and reserves are being released to them persuant to the contractual terms only, which is actually 18 months after the last transaction is processed - which is pure overkill. Also the terms of how my final chunk of reserves will be released to me.

I can't complain though, the last release about 2 years ago was $25K ... They basically have released about that much at a time every once in a while for years now... I tried to play pissed when I got the denial from this this week But I knew it was coming before I even asked for it ...

[RyanLanane]

Dravyk, to a degree I agree with you...

If this is the cost of doing business we more than paid for the VISA fines they have been hit with, all their corporate flights, and so much more through interest alone. Do you have any idea how much the larger companies have sitting with them in reserves only?

If I had to guess, compared to my processing levels at the time... The big companies have at least $1 million in reserves each with epoch... That's alot of interest being collected

[Dravyk]

Originally Posted by RyanLanane

The big companies have at least $1 million in reserves each with epoch... That's alot of interest being collected

This is among the reasons we have always seen the larger companies eventually getting their own merchant accounts.

As for reserves in general, I know my little company with Content God, that CCBill always sends our checks every seventh months on time as they should.

[Nickatilynx]

Originally Posted by Dravyk

This is among the reasons we have always seen the larger companies eventually getting their own merchant accounts.

As for reserves in general, I know my little company with Content God, that CCBill always sends our checks every seventh months on time as they should.

Ibil?

Yeah there payment terms are cool (If i was the one paying out!!!)

"OK for 4 mths we won't pay you at all , but after those 4 mths we will pay you the recurs off the members you still have with us after those 4 months.

And the 4 mths we haven't paid you for , we will give you a nice letter saying we might , one day , perhaps , if you are real lucky"

and people think I'm a thieving fucking gypsy lol

[Dravyk]

Compared to iBill, you're freaking Mother Theresa!

[Nickatilynx]

Originally Posted by Dravyk

Compared to iBill, you're freaking Mother Theresa!

Bless you my son.